GyanGramWhat is/are the purpose/purposes of the ‘Marginal Cost of Funds based Lending Rate (MCLR)’ announced by RBI?…
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What is/are the purpose/purposes of the ‘Marginal Cost of Funds based Lending Rate (MCLR)’ announced by RBI?
1. These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances
2. These guidelines help ensure availability of bank credit & interest rates which are fair to the borrowers as well as the banks
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• Correct Answer: C
• MCLR introduced by RBI improves transparency by linking lending rates to marginal cost of funds and policy rate transmission.
• It ensures fair interest rates for borrowers while allowing banks to cover costs and maintain margins.
• Both statements correctly capture the rationale behind the MCLR framework.
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